Verizon Wireless to Give SMS a Voice

Verizon Wireless is among several carriers planning to launch services that let subscribers send text messages from wireless phones to landline phones.

Sources at the company behind the technology, Telemessage Inc., say Verizon Wireless will use Telemessage's SMS product to convert typed text messages into audio messages that play to a recipient's landline phone. To send the messages, wireless customers would just dial in the recipient's phone number, same as with a regular text message, so the learning curve is low.

Verizon Wireless is planning to launch the service in mid-June, according to sources at TeleMessage. A spokesman for Verizon Wireless declined to discuss the launch.

Sprint Nextel Corp. (NYSE: S) launched its Text to Landline service with TeleMessage last month. Other customers include Rogers Wireless Communications Inc. (NYSE: RCN; Toronto: RCM), Bezeq, The Israel Telecommunications Corp. Ltd. (OTC: BZQIF), and Illinois Valley Cellular in Marseilles, Ill.

Some carriers charge their normal text messaging rates for the service, while others charge a premium for sending a message to a landline. Verizon is expected to charge an additional fee for the service.

Launching text-to-landline services can increase text messaging traffic by 1 to 3 percent, according to Mark Carlin, vice president of American sales at TeleMessage. (TeleMessage keeps track of the number of sent messages, but does not publicly disclose that number.) This is significant, considering larger carriers process billions of text messages monthly.

"SMS is absolutely the leading source of data ARPU," says Jonathan Atkin, a telecom analyst at RBC Capital Markets in San Francisco. The nation's top three wireless carriers each reported first-quarter earnings that indicated data made up more than 10 percent of per user revenue. (See Cingular Churns Out Profit in Q1 and Sprint Nextel Revenues Up, Profits Down and Verizon: Wireless Funds Fiber.)

While receiving an automated speech message on a landline may seem odd, the target market isn't the recipient, but rather the message-happy sender.

"The target audience loves to text message, and sending a text message is faster than calling," Carlin says. To that end, TeleMessage is in talks with several youth-focused mobile virtual network operators.

The company also is in negotiations with Cingular Wireless and T-Mobile USA , Carlin says, but he doesn't expect either company to launch TeleMessage's text-to-landline services before the fourth quarter of 2006. A spokesman for Cingular said there's no date set for such services.

TeleMessage is a wholly-owned subsidiary of Messaging International plc, which was listed on the Alternative Investment Market of the London Stock Exchange last July. TeleMessage is composed of the Massachusetts-based Telemessage Inc., which focuses on American markets, and the Israeli-based TeleMessage Ltd., which serves European and Asian markets. (The company gained recent fame during an episode of the Israeli reality show "The Ambassador," in which contestants, budding ambassadors to Israel, presented four Israeli companies to Wall Street investors.)

Telemessage also makes a plug-in tool that lets mobile phone service subscribers send SMS and MMS (multimedia message service) messages from their PCs, to individual mobile phone numbers or groups. In this space, Telemessage competes with such companies as Red Oxygen and General Wireless AB . The tool aims to increase the uptake of MMS, which has been slow in the U.S.

"MMS is not that big," Atkin says. "It would be a number four contributor, after SMS, Web access, and downloads… But they're all growing."

Several major U.S. carriers will launch the plug-in by the end of the year, Carlin says.

— Carmen Nobel, Senior Editor, Light Reading. Special to Unstrung